Watchdog investigates alleged Canadian chocolate 'cartel'

Regulators have launched an investigation into allegations that the Canadian divisions of Nestlé, Cadbury, Hershey, Mars and others have engaged in a price-fixing scheme in the multibillion-dollar chocolate bar business, according to a media report.

Canada's Competition Bureau served search warrants on several major bar makers this week, requiring them to turn over reams of documents on their pricing arrangements, the Globe and Mail reported in Wednesday editions.

"We can confirm that we are investigating alleged anti-competitive practices in the chocolate confectionery industry," said John Pecman, the bureau's assistant deputy commissioner in the criminal matters branch.

"The volume of commerce affected here is definitely potentially in the billions of dollars per year."

Pecman said an Ontario court recently "granted search warrants based on the evidence that there are reasonable grounds to believe that a number of the suppliers in the chocolate industry have engaged in activities contrary to the conspiracy provisions —that's a cartel —of the Competition Act."

Pecman would not identify the companies.

The investigation is focused on chocolate products, but could expand to other types of candy depending on what is uncovered, he said.

"There are no conclusions of wrongdoing at this time," Pecman said. "We're just at the investigative stage."

All four companies said they would co-operate fully with any investigation, the Globe and Mail reported.

"We are aware of it, but all we can say is that we can't comment on any ongoing investigation, but we are co-operating with any inquiries," Cadbury spokesman Simon Taylor told the Associated Press on Wednesday in London.

Hershey did not immediately return calls early on Wednesday.

Canadians buy about $2.3-billion worth of chocolate and candy every year, according to the Confectionery Manufacturers Association of Canada.